APFA2013/05/28ANAHEIM PUBLIC FINANCING AUTHORITY
REGULAR MEETING OF MAY 28, 2013
The Anaheim Public Financing Authority regular meeting was called to order at 5:41 P.M. for a
joint public comment session with the Anaheim City Council. The meeting notice, agenda and
related materials were duly posted on May 24, 2013.
Present: Chairman Tom Tait and Authority Members: Jordan Brandman, Gail Eastman, Lucille
Kring and Kris Murray.
Staff Present: Interim City Manager Marcie Edwards, Interim City Attorney Michael Houston
and Secretary Linda Andal
ADDITIONS /DELETIONS TO THE AGENDA: None
PUBLIC COMMENTS: No public comments made related to the Public Financing agenda.
CONSENT CALENDAR: At 6:40 P.M., Authority Member Brandman moved to approve the
Public Financing Authority consent calendar as presented, seconded by Authority Member
Eastman. Roll Call Vote: Ayes — 5: (Chairman Tait and Authority Members: Brandman,
Eastman, Kring and Murray). Noes — 0. Motion Carried.
PFA187 1. Approve minutes of Public Financing Authority meeting of October 23, 2012.
END OF CONSENT CALENDAR:
2. RESOLUTION NO. APFA 2013 -001 A RESOLUTION OF THE BOARD OF
13137.1 DIRECTORS OF THE ANAHEIM PUBLIC FINANCING AUTHORITY authorizing the
refunding of the Authority's Revenue Refunding Bonds, Series 2002 -B (City of Anaheim
Electric System Generation System Refunding) and approving all actions in connection
therewith
Marcie Edwards, Interim City Manager, remarked this item was intended to reduce utility debt
overall, save approximately $4 million in interest expense and create flexibility for the utility to
continue to economically manage its energy portfolio.
Ed Zacherl, Assistant General Manager of Finance and Administration, reported this item was a
resolution authorizing a refund of the outstanding APFA Series 2002 -B electric revenue bonds
with the same transaction included on the council agenda to identify the source of the funds for
the refunding. Staff was requesting council approve the Utility's use of the previously- approved
line of credit in the amount of approximately $51 million in order to retire the outstanding bonds.
He stated the majority of the bonds were used to fund Anaheim's partial ownership of the San
Juan Generating Station, the coal burning electric generating facility located in New Mexico and
that normally, the request to refund these bonds would be to take advantage of the current low
interest rates and replace them with new bonds with a fixed rate maturing in 2020, the original
maturity date. However, he pointed out, rather than refund these bonds, staff was asking
instead to retire them, using the line of credit to do so and not issue new bonds.
ITEM NO. 04
Public Financing Authority Minutes of May 28, 2013
Page 2 of 2
This action was requested because the bonds were associated with the San Juan Generating
Station and that coal burning plant was subject to increasing emission control standards and
associated costs. In fact, Anaheim's on -going participation in San Juan was being evaluated
and was not certain at this time. By using the line of credit instead of issuing new bonds,
Utilities could take advantage of the significantly reduced interest rates and more importantly,
use the line of credit that would afford greater flexibility with respect to Anaheim's future role In
the San Juan Power Plant. Using the line of credit as opposed to refunding the bonds, the
department would not be locked into having to stay in the San Juan power plant until the year
2020 and be able to convert from tax exempt to taxable funding within a week's time. Being
able to quickly convert to taxable funding, he explained, Anaheim Utilities would avoid violating
the IRS private use restrictions that were otherwise associated with tax exempt debt. In
addition, funding the remaining debt in this fashion, Anaheim would then be able to divest its
share of San Juan should the opportunity become available and be the prudent course. Any
actual divestiture actions, he added, would require council approval.
In summary, about $4 million in interest expense savings would be realized between now and
2020 and the retirement of the bonds would free up existing restricted $9.2 million in reserve
funds. As far as risks associated with using the line of credit, Mr. Zacherl stated staff believed
they were manageable. The credit could be paid back at any time and was not subject to a
specific debt repayment schedule and cash flow could be better accommodated. In addition, he
noted, if short term rates were raised significantly, the department could still issue fixed rate
bonds to pay off the line of credit and mitigate that issue.
He ended the report stating this transaction was a sound business decision and an appropriate
way to manage assets, reduce debt, and provide options and flexibility in response to changing
business conventions and regulations.
Council Member Kring moved to approve RESOLUTION NO. APFA 2013 -001 OF THE BOARD
OF DIRECTORS OF THE ANAHEIM PUBLIC FINANCING AUTHORITY authorizing the
refunding of the Authority's Revenue Refunding Bonds, Series 2002 -B (City of Anaheim Electric
System Generation System Refunding) and approving all actions in connection therewith
ADJOURNMENT:
There being no further business, Chairman Tait adjourned the meeting of the Anaheim Public
Financing Authority at 6:46 P.M.
Res ec ully Submitted,
Linda N. Andal, CIVIC
Secretary, Anaheim Public Financing Authority